Evidence of meeting #7 for Agriculture and Agri-Food in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was canola.
A recording is available from Parliament.
Liberal
Tim Louis Liberal Kitchener—Conestoga, ON
To follow up, as Canada is moving forward, are there other countries that are also doing the same sorts of things that we can look to in order to make improvements, to move things in a faster way?
Chair, Economic Strategy Table—AgriFood, Department of Industry
I would say that everybody is trying to follow us, actually. We're encouraging the government to continue with its ability to move fast. Infrastructure is going to be key. We need that intermodal container side to be much more reliable.
I want to remind policy-makers that steamship container-line consolidation has really created a global oligopoly, with global steamship lines showing record profits in the tens of billions of dollars. A lot of the supply chain issues we're talking about here are really looking at a pricing power that steamship lines have over industries. Governments need to make sure they're checking that. We're not seeing that today.
Liberal
Tim Louis Liberal Kitchener—Conestoga, ON
I appreciate your mentioning that. That's something other witnesses have.... I'm hoping that will be in the report.
Just to pivot, because of the shortness of time, one action you suggested in your opening statement was developing and diversifying Canada's agri-food markets. I wanted to talk about genomics. It's a young science, and it has the potential to produce more high-quality, safe food on less land, with less of an environmental impact. I was wondering if we could discuss how genomic technologies could fit into the ag sector, how we could get your input and how we can equip industries to be more productive, sustainable and competitive globally.
In 2021 the government announced $400 million for a pan-Canadian genomics strategy. What potential does genomics have to alleviate the pressures and innovate our sector?
Chair, Economic Strategy Table—AgriFood, Department of Industry
It's all about doing more with less. That's going to lower our carbon intensity. Understanding the genomics properly and allowing the proper evolution of varieties is going to be very important.
Again, it's all about technology and innovation and staying ahead...and drought resistance. Climate change is having an effect, so the ability and volatility of agricultural production needs to be attacked with technology. The strategy on genomics is very sound and is certainly going to deliver some very strong benefit for the sector going forward.
Liberal
Tim Louis Liberal Kitchener—Conestoga, ON
Thank you.
With only a minute left, maybe I could go to Ms. Wright from the Canadian Agricultural Human Resource Council.
We talked about post-secondary education connecting with industry and students. In my region we have Conestoga College, which has an agricultural equipment-operating program and an agri-business management program. You mentioned biology, business, the finance side, all those opportunities available.
In this last minute, can you give us examples of programs throughout Canada that are showing success, so we can learn how best to share these practices?
Jennifer Wright
Definitely in regard to programs, particularly the new program at Conestoga is a great example of the types of things that need to be thought of and implemented to help train people fairly quickly to engage in the industry.
Some other great examples are the smart farm that Olds College has, and I believe the University of Manitoba has one as well, helping connect students with hands-on—
Liberal
The Chair Liberal Kody Blois
Thank you, Ms. Wright. I'm sorry. We're at time.
Mr. Perron, I'm not trying to be unfair; I'm trying to make sure we stay on time. Do you have one very specific question?
Bloc
Yves Perron Bloc Berthier—Maskinongé, QC
Yes. Thank you, Mr. Chair.
Ms. Wright, you mentioned in your statement that the labour shortage was extremely serious, that it had caused a 30% increase in input costs, and that you may need support to do automation.
With regard to the contingency plan that has been proposed for foreign labour, have you received a response from the government? Also, would you need support, an investment policy in agribusiness?
Jennifer Wright
The emergency plan was put forward by the food manufacturing side of production, so I can't comment on the process that's going on there or whether they've received feedback. I apologize.
NDP
Liberal
The Chair Liberal Kody Blois
Okay. I appreciate that. I didn't mean to squeeze you guys. We're just trying to stay on time. Thank you.
To our witnesses, on behalf of the committee, thank you very much for your time here today. We apologize for some of the technical difficulties we encountered, but I know we're all richer as a result of your testimony and your evidence here today.
Colleagues, we're going to break for just a minute or two and get our second panel in.
Thank you very much. We'll resume momentarily.
Welcome back, everyone.
Thank you to our technical team for the quick turnaround. That was record speed.
We're on our second panel today.
Joining us by teleconference, we have the Canadian Canola Growers Association, with Dave Carey, serving as vice-president of government and industry relations. Dave, it's good to see you.
We also have Steve Pratte, who serves as the policy development manager. Welcome.
From the Canola Council of Canada, we have Chris Davison, who serves as vice-president of stakeholder and industry relations.
From McGill University, we have Pascal Thériault, who serves as the agriculture economist and director, farm management and technology.
Mr. Thériault, as a Liberal member, I couldn't help but notice the colour of your jacket. I think it looks just wonderful on you.
We're going to start with Mr. Carey for five minutes.
Dave Carey Vice-President, Government and Industry Relations, Canadian Canola Growers Association
Good afternoon. I'm joined here, as you said, by my colleague Steve from our Winnipeg office. Steve's a leading expert on rail policy. Thanks for inviting us to speak today about your study on the agriculture supply chain in Canada.
CCGA is the voice of Canada's 43,000 canola farmers. In any given year, over 90% of Canadian canola, in the form of raw seed or the two processed products of oil and meal, is ultimately destined for the export market to more than 50 countries. In 2020, 13.7 billion dollars' worth of canola was exported. We're the world's largest producer and exporter of this high-value oilseed. Our industry is estimated to support 207,000 jobs and to contribute $29.9 billion to the Canadian economy annually.
Canola farmers rely on rail transportation to move their products to export customers and to keep those product prices competitive with the global oilseed market. On average, canola travels 1,500 kilometres from farm to tidewater to be in export position. Farmers independently strive to maximize both the quantity and the quality of their production each year. Once the canola is harvested, they sell it into the system based on their specific marketing plan, with the overall goal of capturing the highest possible prices at any given time in a dynamic and ever-fluctuating global commodity market.
The transportation of grain is one of several commercial elements that directly affect the prices offered to farmers. When issues arise in the supply chain, the prices farmers receive for their grain can drop, even at times when commodity prices are high in the global marketplace.
In periods of prolonged rail disruptions, the worst-case scenario is when space in grain elevators becomes full and grain companies stop buying grain and accepting deliveries from farmers. This can occur even when a farmer has a contract for delivery in place, potentially straining their ability to cash-flow their operations. This is a major reason that western Canadian farmers have such a vested interest in transportation. It directly affects an individual farmer's income. Beyond that, they rely on the service of Canada's railways to move grain to export position. There's no alternative now or into the near future.
The modern grain supply chain is predicated on having the right grain in the right place at the right time. There are a lot of moving parts in this complex system.
Let me turn to the specific question at hand—the current situation and difficulties in the agriculture supply chain. Our perspective is on two different levels, both the here and now and into the future. Then I'll offer suggestions as to the role the federal government can play.
In crop year 2020-21, the railways set a new benchmark in the movement of western Canadian grain, shipping over 61 million tonnes. Within that, over 52 million tonnes fell under the maximum revenue entitlement regulation, setting a new volume record. For the first time, both CN and CPR each earned over $1 billion. All stakeholders benefited from the strong supply chain performance. It showed what can be done when the grain handling and transportation systems work effectively.
This year has been an illustration of great contrasts, good and bad, and has given us yet another illustration of how fragile the agriculture supply chain in Canada really is. This time the source of disruption was severe weather that severed the critical railway artery, twice in five months, in the same general area in British Columbia.
Since fully reopening on December 5, the railway system recovery has been an ongoing struggle that has been witnessed by performance metrics observed by Canada's grain shippers. This could have been an extremely bad situation for the entire agriculture sector, but to some degree the negative impacts on farmers were mitigated by a 40% smaller crop last year, due to the western Canadian drought and the strong export program in the weeks before the railway disruption. However, there have been significant costs accruing to the exporters, largely due to contractual costs associated with grain vessels.
This has had a major impact on the grains sector due to the export profile of our commodities. Currently, 70% of western Canadian bulk grain is destined for the port of Vancouver. This is enabled by significant investment by grain exporters in the port of Vancouver over the last decade. The current and future importance of this particular west coast export outlet cannot be understated.
When we look to 2030, we anticipate further rising demand for our products, both domestically and internationally. As a country, we need to prioritize and coordinate an approach to critical infrastructure. There's work being done, but it needs to be expanded. It is complicated, as the ownership of tunnels, bridges, railway lines and roads varies.
I could point to the north shore grain terminals in the port of Vancouver as a prime example. There's one rail line that transits through a tunnel and then over a lift-bridge, both owned by that railway, to access the four grain terminals on the north shore. This route also serves the other bulk commodity terminals, such as for sulphur and coal. There's no backup routing to serve these terminals in the event of a disruption on the tunnel or bridge.
In conclusion, as witnessed last fall, when critical supply chain infrastructure is imperilled, the entire system can be affected. The 2015 report of the Canada Transportation Act review took a comprehensive look at the governance and coordination of investment and project planning, and made a variety of recommendations on how to do this.
We need to get back in the business of nation-building projects. Canadian farmers and industry will need an effective and responsive rail-based transportation system, for transportation not just of the current crop sizes, but also of those of the future. Moreover, farmers will need to capitalize on the opportunities for Canada's existing and future trade agreements. They can't do so without a reliable and efficient rail system that grain shippers and our global customers have confidence in.
Thank you.
Liberal
Chris Davison Vice-President, Stakeholder and Industry Relations, Canola Council of Canada
Great, thank you.
Chair Blois and members of the committee, thank you for the opportunity to be with you today and to join you with my fellow panellists.
The Canola Council encompasses all links in the canola value chain. Our members include canola growers, life science companies, grain handlers, exporters, processors and others. Our shared goal is to ensure the industry's continued growth and success and to do this by meeting global demand for canola and canola-based products, which include food, feed, fibre and fuel.
As you've heard, our industry represents almost $30 billion in economic activity annually, 207,000 jobs, $12 billion in wages and the largest share of farm cash receipts in the country. Our strategic plan is built on three key pillars. These are sustainable and reliable supply, differentiated value, and stable and open trade. All of these are connected with and dependent on a well-functioning supply chain.
I don't need to tell anyone here about the perfect storm our agriculture and agri-food sectors have faced over the last 12 to 24 months or so, be it weather, COVID, transportation, shortages of material inputs or labour challenges, just to name a few. We have heard about all of these from our members.
Our message to you is not just about the supply chain challenges of today. It's about the importance of addressing and future-proofing against the challenges of the future to support growth and competitiveness. Our biggest challenge as an industry is meeting demand for our product, both domestically and internationally.
Today we export over 90% of the canola we produce to more than 50 countries around the world that are hungry for healthy cooking oils, sustainably produced sources of biofuel feedstocks and meal that enhances the diets of livestock. At the same time, here in Canada in the last 12 months or so, we've had announcements of more than $2 billion in capital investments related to the building of new domestic crushing and processing facilities for canola, as well as the expansion of existing ones. These announcements have been driven primarily by market signals regarding the development of a North American biofuels market.
The demand fundamentals for what we produce are strong, but could also be altered significantly in terms of their domestic and international makeup over the course of the next several years.
We are also not without challenges, including post-COVID protectionism and intensified competition.
To be sure, part of being a reliable supplier is to have the products our customers want and to be able to get those products to them when, where and how they want them. If the definition of a supply chain is about the full sequence of processes involved in the production and distribution of a good or service to the consumer or end user, there is also more to think about.
With the limited time we have today, I want to highlight three areas of consideration as you continue your study of our agricultural and agri-food supply chain. They are innovation, regulation and market access.
It's important to highlight the fundamental role that innovation plays in our ongoing ability to meet customer demand, and hence its role as part of an effective supply chain. We are currently in the process of updating and refreshing our innovation strategy with a focus on improving performance, increasing precision, protecting the crop and markets, and focusing on our strengths as an oilseed crop.
Support for this strategy and its recommendations, inclusive of research investments and collaboration between growers, government, universities and private researchers, will be crucial to our ongoing ability to be a reliable supplier. A more resilient crop leads to a more resilient supply chain. Innovations within the canola industry will help ensure that the crop is better positioned to withstand the impacts of our changing climate and other agronomic and production challenges.
However, these innovations can come to fruition only with the support of a predictable and science-based regulatory system, which is the second area of interest.
We are long-standing advocates of a regulatory system that provides appropriate safeguards for health and safety and that also enables sector innovation and competitiveness. As it relates to a well-functioning supply chain, such a regulatory system must ensure that Canadian canola farmers have access to the crop protection, seed tools and technologies they need to continue to grow the great Canadian innovation that is canola. They need to not just grow it, but also grow more of it—even more sustainably through increased productivity—to meet the needs of our customers. Without these tools, we will not retain our status as a reliable supplier.
Finally, I want to highlight market access. The Canadian canola supply chain is highly integrated into global markets, with exports of seed, oil and meal valued at $13.7 billion in 2021. The largest markets for our exports are the United States, China, Japan, Mexico and the European Union. If access to these or other markets is restricted, the risk to producers and others in the supply chain is real and something we have experienced first-hand.
As part of our efforts to support stable and open trade, we have a market access plan built around specific pillars that include eliminating tariffs, science-based sanitary and phytosanitary rules, and access to innovation and technology. Our market access approach relies on clear organization of responsibilities, co-operation and common commitment from both industry and government. Industry's roles include market promotion by working closely with customers; prioritizing opportunities through identification of markets, export destinations and innovations with the greatest potential; and execution by ensuring quality, arranging logistics in an efficient way, and selling into the valuable markets.
Liberal
The Chair Liberal Kody Blois
Thank you, Mr. Davison. You're perhaps right on time.
It is now your turn, Mr. Thériault. You have five minutes.
Pascal Thériault Agricultural Economist and Director, Farm Management and Technology, McGill University
Thank you for inviting us today.
Canadians can take pride in our agri-food system. We have long been fortunate to have a well-functioning and efficient system that allows us to have one of the cheapest grocery baskets in the world, despite our northern climate.
Our agri-food system first developed mainly with family-owned agricultural enterprises, which grew over time. The increase in their size was partly caused by a need for profitability. Downward pressure on prices led, over time, to a phenomenon where businesses had no choice but to grow larger to maintain profitability in the face of ever-decreasing margins.
The efficiency of our producers, processors, transporters, wholesalers and retailers in producing the commodities and delivering the products to the consumer no longer had to be demonstrated. The system worked because everything was efficient along the chain.
The pandemic showed us the weaknesses of our system. All it took was for one link in this well-oiled chain to falter, and the impact was felt throughout. COVID‑19 disturbed the various actors in the agri-food chain, resulting in a loss of efficiency. Because they moved more slowly, companies increased their production costs.
As we emerge from this pandemic, we can ask ourselves what lies ahead. With rising input prices, and therefore food prices, and labour issues in both the agriculture and agri-food sectors, we need to increase the value of jobs in the agriculture and agri-food sectors, both professionally and in terms of technical and academic training to maintain our ability to feed Canadians.
It is also important that the government put resources in place to better educate citizens about the realities of agriculture. We have, as a society, moved away from what producing food entails. So the work of valuing our agri-food sector must also be done with consumers, so that they better understand what we do and why we do it.
Thank you.
Liberal
The Chair Liberal Kody Blois
Thank you very much, Mr. Thériault.
We'll move on to the first round of questions.
Mr. Barlow has six minutes at his disposal.
Conservative
John Barlow Conservative Foothills, AB
Thank you very much, Mr. Chair, and thank you to our witnesses for being here.
I'm going to start with Mr. Carey, from the Canola Growers Association, on some of the comments he made in his presentation.
You noted that after a very strong crop year in 2020-21, we saw some major disruptions as a result of the flooding in B.C. and some other issues. You also mentioned that it could have been much worse if we'd had a typical size of crop in 2021-22.
Could you maybe elaborate a bit on what could have happened had we had a typical or normal crop this past year compared to the previous year?
Vice-President, Government and Industry Relations, Canadian Canola Growers Association
I will begin, but then I will defer to my colleague Steve.
One really important aspect of this is our reputation as a global trader and the fact that we need to get our canola to our customers and market as soon as possible. If we'd had a normal year, this would have been a perfect storm, in the worst possible way.
Steve, maybe I will call on you to provide more specific details.
Steve Pratte Manager, Policy Development, Canadian Canola Growers Association
Very quickly, to your question, Mr. Barlow, certainly I think you would have seen similar effects to what happened in 2013-14 with the backlog, when we had a bumper crop.
There are analysts out there who would point to the fact that if we'd had a normal-sized crop, you would have seen the plugging of elevators in country. Then, for the farmers at the farm gate, there would be that inability to deliver, therefore crunching on their credit and having to draw on various commercial programs out there to finance their farm operations.
That would be the impact out in country for farmers.
Conservative
John Barlow Conservative Foothills, AB
Thank you. You also mentioned specifically the north shore of Vancouver and how delicate that situation is with the tunnel and the bridge.
We had Mr. Murad Al-Katib from AGT foods here previously. He talked about the importance of a long-range infrastructure plan. One of the comments he also made was that we need to ensure that products that could be moved in a pipeline free up space on rail.
Maybe I could get your comment on that, the impact of the delicate situation at the port of Vancouver, and some of the opportunities we have to better use transportation tools that are available to move product, to ensure we get them to market in a timely fashion.
Vice-President, Government and Industry Relations, Canadian Canola Growers Association
I'll start. Again, I'll call on Steve.
As we indicated, about 70% of bulk grain ends up going through Vancouver. For canola, that's about seven million tonnes a year. Prince Rupert takes about 1.8 million tonnes, and Thunder Bay takes about 1.6 million tonnes. We just can't ignore where that commercial canola crop is destined for market. Any improvements we can make to the system, looking at it from a more long-term perspective and listening to the previous panel, not based on electoral cycles, is critically important if we look at, as I mentioned, the nation building. The supply chain summit was a good start, but, again, I might call on my colleague, Steve, to provide more of a technical perspective.
Manager, Policy Development, Canadian Canola Growers Association
Very briefly, Mr. Barlow, certainly at some point in the near future, ideally all commodities will take off again Canadian export-wise, be it grain, potash, sulphur, coal or what have you, and there will come a time, in our view, when the capacity of the north shore will become strained.
There is a study that has been done. I think it's known, but, again, getting back to Mr. Al-Katib's recommendations, especially from the 2015 Canada Transportation Act review and the strategy table, we really need to start thinking about these things and plotting out our action in a non-partisan way, just because at some point, as an exporting nation, this is all going to come down to bear.
Conservative
John Barlow Conservative Foothills, AB
I appreciate that.
For both, I guess we look back at that 2015 report of a review of the Canadian Transportation Act. I'm assuming we haven't followed up on some of the recommendations that were in there to try to address some of the critical kinks in the supply chain. I look back at the rail blockades of two years ago and certainly the CN strike. There have been lots of opportunities for us to address some of these issues, and we still haven't done that.
You touched on—and maybe, Mr. Davison, you can jump in on this as well—the impact this is having on our reputation as a trusted trading partner, on our ability to meet our commitments around the world, and on our competitiveness. Can you go into a bit more detail? We always talk about our reputation, but what are the ramifications if we lose that reputation of being a trusted resource or trusted source and lose our competitiveness? What is the overall result of that?
I know that's a big question, but maybe touch on that as best you can.
